The Miller's original complaint alleged violations of ERISA
and breach of contract. On May 24, 1991, this Court entered an
Order dismissing Miller's ERISA claim.*fn1 Because Miller's
breach of contract claim was pendent to his ERISA claim, this
Court dismissed the breach of contract claim also.
Miller then filed an amended complaint under diversity of
citizenship jurisdiction. 28 U.S.C. § 1332. On October 11,
1991, Miller filed a Motion for Summary Judgment. Taylor filed
its Motion for Summary Judgment on November 20, 1991.
STATEMENT OF FACTS
Miller began employment with Taylor in 1963. In 1973, Miller
became president and in 1979, was chairman of the board.
Defendant Jon Nelson was elected to succeed Miller as
President upon Miller's retirement. On November 8, 1979,
Miller retired and the parties executed a document titled
Taylor Insulation Company Consultation and Non-Competition
Agreement (Agreement). The Agreement entitled Miller to
participate in Taylor's sick-pay plan, the medical
reimbursement plan and the group life insurance plan which
were currently effective. The term of the Agreement was ten
years, commencing December 1, 1979.
Miller alleges breach of contract by Taylor in denying
reimbursement for Miller's medical claims and not paying the
claims as provided in the Agreement. The controversy before
the Court concerns Taylor's medical reimbursement plan. Miller
contends that paragraph 3(b) of the Agreement provided
benefits to Miller and his dependents. Taylor disputes that
the Agreement provided the "benefits" of the medical
reimbursement plan. It claims Miller was only "entitled to
participate" in a group health plan, and that actual coverage,
and the right to benefits, was determined by the group health
At the time the Agreement was entered into, Taylor's medical
reimbursement plan included a combination of benefits, some
provided directly by Taylor, and the remainder through a group
health insurance policy issued by Great West Insurance
Company. The parties do not dispute that the group health
insurance policies were a major component of Taylor's medical
reimbursement plan in effect at the time the Agreement was
made. In 1980, Taylor changed its insurance carrier to United
of Omaha. The United of Omaha policy remained in effect until
January of 1987. On January 28, 1987, Taylor obtained new
group health insurance from New York Life.
Between 1979 and 1986, Miller made claims for medical care
for himself and his dependents and benefits were provided.
When Taylor changed its health insurance carrier from United
of Omaha to New York Life on January 28, 1987, Miller's name
was not submitted for coverage under the New York Life policy.
As of that date, Miller was no longer a participant in
Taylor's medical reimbursement plan. Miller, however, was not
aware that he had been dropped from the plan.
In June of 1987, Miller submitted medical bills to Taylor
for payment. On July 7, 1987, Taylor notified Miller that it
was denying the claims because Miller was not included in the
group health policy with New York Life.
On January 15, 1992, the Seventh Circuit decided the case of
Emil J. Bartholet v. Reishauer A.G. and Reishauer Corp.,
953 F.2d 1073 (7th Cir. 1992). Plaintiff and Defendant were
instructed by this Court's Order of March 4, 1992, to submit
legal memoranda with reference to the effect of the Bartholet
case on the issues now before the Court. Both parties are in
agreement that Plaintiff's claims based on a state law breach
of contract theory "relate to" ERISA and are therefore
preempted by ERISA.*fn2
In Bartholet v. Reishauer, 953 F.2d 1073 (7th Cir. 1992), the
Seventh Circuit found that Congress had intended, in enacting
ERISA, for federal law to completely occupy the field of
pensions. The court stated that "a complaint reciting that the
claim depends on the common law of contracts is really based on
the [ERISA] if the contract in question is a pension plan."
In Bartholet, plaintiff and defendant signed a contract at
the time plaintiff began work for defendant. As plaintiff
interpreted it, the contract entitled him to pension benefits
computed on the assumption that his years of employment with
another company would count as years of employment with the
defendant. Over the succeeding four years plaintiff proposed
various plans to the defendant but the plan finally adopted by
the defendant did not give the plaintiff credit for the years
of service with the other company. The plaintiff filed a claim
in state court alleging, inter alia, that the plan adopted by
the defendant failed to create a pension plan with credit for
years of service at the previous company. The defendant removed
the case to federal court asserting that the plaintiff's demand
for additional pension payments is necessarily based on ERISA.
The plaintiff argued that he only wished to enforce his
Relying on Lister v. Stark, 890 F.2d 941 (7th Cir. 1989), the
Seventh Circuit in Bartholet stated that in both cases the
pension plan specified one benefit, and the employee said that
his employer contracted to supply a greater one. A suit based
on the difference between the pension promised by contract and
the pension established by the plan "relates to" the pension
plan and is therefore preempted by ERISA. The Seventh Circuit
reversed the district court's dismissal of the complaint,
holding that a complaint does not need to plead law as well as
fact. Even though not stated as a claim under ERISA, ERISA was
the gravamen of plaintiff's claims. The case was remanded to
the district court to determine whether the writing had the
meaning the plaintiff saw in it, and whether there was a remedy
under ERISA when the plan did not live up to the promise.
In the case presently before the Court, Miller claims that
he is entitled to relief under state common law of contract
theory. He claims that the written agreement entitled him to
participate in the group health insurance. As purchased by
Taylor, however, the group health policy did not cover Miller
because he was ineligible under the terms of the policy which
required that employees work at least 20 hours weekly at the
employer's place of business. Because this Court has
previously found*fn3 that the group health policy constitutes
an employee welfare plan, Miller's claim "relates to" the
Based on the authority of the recent case of Bartholet v.
Reishauer, 953 F.2d 1073 (7th Cir. 1992), Plaintiff's pending
state law claims are preempted by ERISA. As such, the Court
DENIES Plaintiff's Motion for Summary Judgment (# 42-1) and
GRANTS Defendant's Motion for Summary Judgment (# 46-1).
Defendant's Motion Requesting the Court Take Judicial Notice (#
52) is MOOT.